More than a million families are set to receive bad news from the taxman, in the form of letters telling them they will effectively lose some or all of their child benefit.

From January 2013 households receiving child benefit where one parent or partner earns more than £50,000 will be hit with a new income tax charge. This "penalty" is designed to cancel out some or all of the benefit of receiving the payments.

Families will effectively be given a choice: give up your child benefit completely or pay it back later via the tax charge, said the ICAEW, an organisation representing accountants.

The other bit of bad news for some parents is that they are about to be dragged back into the self-assessment regime and will have to fill in a tax return.

The government provoked concern in some quarters when it announced plans to withdraw child benefit completely from any household with a higher rate taxpayer. Ministers later relented, introducing a system where the benefit is withdrawn gradually where someone has an income above £50,000.

At that level, the new income tax charge is 1% of the amount of child benefit for each £100 of income between £50,000 and £60,000. For those earning above £60,000 the charge will be the same as the total amount of child benefit received – they will effectively receive nothing.

In the case of a family with two children where one parent has an income of £54,000, the total amount of child benefit is currently £1,752 a year (£20.30 a week for the eldest child, plus £13.40 a week for the other child). Their tax charge would be 40% of £1,752, which is £700. If the parent's income was £62,000 the tax charge would be for the full £1,752.

The regime takes effect from 7 January 2013, and HM Revenue & Customs (HMRC) letters giving more details are expected to go out later this month.

HMRC has said about 1.2 million families will be affected, 70% of whom will lose all of their child benefit. "The average loss will be roughly £1,300 per year," HMRC said.

The amounts that people owe will be collected via the self-assessment regime. If you are hit with a charge, HMRC will send you a tax return to complete. That will be a blow to those higher earners who have been told they no longer have to fill in a tax form because their affairs are relatively straightforward.

The ICAEW said: "HMRC estimates that up to 500,000 taxpayers who do not currently complete a self-assessment return will be liable and will have to complete a tax return.

"If you are one of them, you need to start collecting together your paperwork ready to file a paper return, due in October 2013, or an online self-assessment return in January 2014."

The organisation advised:

• Talk to your partner about their income and how the new rules might affect the family's finances. "You may even be better off sacrificing some of your or their salary to avoid the clawback of the child benefit charge."

• Bear in mind that the letter from HMRC will ask how much individual income a recipient of the benefit or their partner earns. "This is not just salary. Dividends, income from rental properties including holiday homes, self-employed earnings, interest on savings and pensions all need to be taken into consideration. Also consider whether any gift aid payments have been made to charities or pension contributions have been made. These can be deducted when determining the final figure."

Anita Monteith from the ICAEW's tax faculty said: "The charge will increase complexity and compliance costs, and we are worried we are going to see the same operational problems arising that we saw for tax credits – especially for those with fluctuating incomes."